Dharamsala constituency is represented by Sudhir Sharma, who is also Urban Development minister in the state cabinet, and inclusion of Dharamsala in smart city mission had evoked strong protests from BJP and CPI(M) leaders in Shimla which was vying for smart city status.

The 90-page ordered passed by a division bench consisting of Justice Rajiv Sharma and Justice Sureshwar Thakur also set aside proceedings of the high-powered steering committee, which had accepted the claim of Dharamshala town, and gave two weeks time to the state government to undertake a fresh excise for evaluation of the self-assessments of the urban towns, including Shimla and Dharamshala, to arrive at a fair and just decision.

The order said that "there is sufficient material to reflect that there is malice in the proceedings which also amounts to colourable exercise of power since the power vested in the members of the high-powered steering committee has been used for the purpose other than for which it was supposed to be."

The bench further observed that the State Mission director had abdicated/surrendered his powers by not at all evaluating the self appraisal sent by the urban local bodies, as if, he was being dictated by some other agency."

The bench noted that "proceedings dated July 15 and July 29, 2015 were arbitrary, unreasonable, capricious and irrational and said that the powers vested in the bureaucracy must be exercised in larger public interest and not to serve the private interest of any individual in the hierarchy.

"There must be fairness and reasonableness while forming the opinion, the court said."

The HC was of the strong view that parameters set-out by the Centre for selecting one city by the high-powered steering committee, headed by the Chief Secretary, were not followed strictly and thus Shimla lost its claim to be listed as one of the country's smart cities.

The order was passed on a petition filed by Mayor of Shimla Municipal Corporation Sanjay Chauhan who had accused the government of fudging the facts to favour Dharamsala over Shimla.

The local BJP MLA and former state president of the party Suresh Bharadwaj had also taken up the issue and accused the government of fudging the facts and said that Shimla's claim for inclusion in Smart City Mission was "indisputable."